China's riders on the storm

The ambitious Bo Xilai was removed as Chongqing Communist Party Secretary on March 15 [EPA]

Hong Kong - Not many people outside China are familiar with foggy Chongqing, in the upper reaches of the Yangtze River, in the heart of Sichuan province. Well, this is the biggest megalopolis in the world: 31 million, and counting. There are more people in Chongqing than in the whole of Iraq, or Malaysia.

And then, suddenly, Chongqing became literally the talk of the (global) town, like a dystopian new Rome, thanks to a monumental political scandal during the National People's Congress on March 15: the downfall of Bo Xilai, politburo member and party secretary for Chongqing.

Bo, wily and media-savvy, was sort of a pop star in China as the top promoter of the so-called Chongqing Model: a back-to-the-past, partly Maoist-inspired push for more state control of the economy, better social services, a harsh crackdown on the local mafia and an effort to promote wealth redistribution, thus alleviating social inequality.

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Even though Bo was a "princeling" - the son of one of the eight immortals of Mao Zedong's revolutionary generation - his rise to power and fame started in the bottom of the hyper-complex party hierarchy.

Bo was promoted from trade minister to party head in Chongqing in 2007. His Holy Grail was to enter the nine-member Standing Committee of the 25-member Politburo, the people who actually run China Inc like a very select oligarchy.

Bo's weapon of choice was quite sophisticated: his neo-Maoist political campaign of purification (in this case, to get rid of the local mafia) - inspired by Mao's Cultural Revolution of 1966-1976 - was advised by a number of local intellectuals. No wonder he became wildly popular. Because tens of millions of Chinese deeply resent the arrogance of the new rich - some of whom made lightning-fast, dodgy fortunes - an anti-corruption drive mixed with a fight for social inequality couldn't possibly do wrong.

But in the eyes of the collective Beijing leadership, it did. And then came the downfall - propelled by the defection and subsequent arrest of Bo's top lieutenant, Wang Lijun, who had sought refuge nowhere else than inside the US Consulate in Chengdu, the no-less frenetic capital of Sichuan province.

Is that a tank or a Ferrari?

Anxious to decode what was going on from Sichuan to the corridors of power in Beijing, Western media fed into the immense conspiracy pool, ranging from the silly to the sillier, and including the full display of silliness.

Chinese micro-blogging sites such as Sina Weibo and QQ Weibo, and the bulletin board of the search engine Baidu, may have speculated about "abnormalities" in Beijing on the night of March 19. But if you know how to set it up, anyone can access Google, YouTube and Facebook in China. The notion that tanks in the streets of Beijing would not be noticed or photographed is simply ludicrous.

Clues about what's really going on in the rarefied inner rings of China's politics usually have to be found in the official media. Significantly, in an unsigned essay that went viral, the Global Times referred to "The Chongqing Incident" without even naming Bo, and called for the Chinese people to trust the party leadership.

Which begs the inevitable question: what is the party line right now?

Reading the tea leaves tells us that Bo's downfall happened only one day after Premier Wen Jiabao officially announced that China needed profound political reforms.

That's an understatement, to put it mildly. China is now smack in the middle of not only a once-in-a-decade political transition; it's also in the middle of an earth-shattering once-in-a-generation transition - from a successful economic model shaped by massive investment to the emerging reality of a consumer society.

No wonder the party is more than ever ultra-cautious in its slow, Deng Xiaoping-esque "crossing the river by feeling the stones". And along comes the charismatic Bo - a sort of Chinese "Slick Willie" Clinton - to lay bare all the indecisions at the top. The collective leadership simply could not handle it.

It's consensus or chaos

For millennia, China had been under the spell of the Mandate of Heaven. If the Emperor lost the divine mandate, he had to go. In this sense, Mao was The Last Emperor. The Little Helmsman Deng Xiaoping - one the giants of the 20th century, the man who allowed China to enter post-modernity - hated imperial displays. His successors, Jiang Zemin and Hu Jintao, were even more self-effacing.

The Communist Party absolutely insists on describing itself as a strictly Confucianist, meritocratic collective leadership, managing the country by consensus. The "consensus" is most of all among the 25-member politburo, and the deciders/implementers consist of the nine-member Standing Committee.

Any criticism in China challenging the political legitimacy of the party is ruthlessly crushed. But in many instances the party does allow people to express their social or economic angst in relative freedom. This will be increasingly the case, with the new urban middle class vociferously challenging countless stances of party corruption.

No political earthquake will prevent Xi Jinping, the current Chinese vice president, from being named the party's general secretary this fall, and then president in March 2013. As a personality, he's the opposite of Bo, a sort of "cautious progressive" - in a Chinese context - pragmatic, and an enemy of "empty talk". His personal motto: "Be proud, not complacent."

Xi was selected not only by the powerful nine members of the Standing Committee, but by wide-ranging internal polling. He's proven his mettle running governments at several levels, from village and county to city and province.

He was in charge of three ultra-dynamic Chinese regions - Fujian, Zhejiang, and the powerhouse of Shanghai. That would be the equivalent of being the prime minister, successively, of Britain, France and Germany.

Xi, significantly, wrote a recent article burying the Bo approach, condemning leaders who "play to the crowd" or "seek fame and fortune", and exhorting consensus - policies "decided according to collective wisdom and strict procedure". In other words, it's our (collective leadership) way, or the highway (which, in a Chinese context, means luan, chaos).

When models collide

Inside China, the top competitor with the Chongqing model is the Guangdong model. Guangdong is a provincial Mecca in China's south, close to Hong Kong, and it practices frenetic, pro-market neoliberalism.

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Bo's economics privileged competition between state enterprises (for instance, no commercials were allowed on local TV). But that, according to the Beijing oligarchy, undermined the very basis of the Chinese miracle: a somewhat downsized state not prone to interfere in business.

The Guangdong model emphasises breakneck economic growth coupled with enough room for more significant political reforms via more transparency in government. Not by accident was Bo replaced in Chongqing by Zhang Dejiang, a deputy premier who was in charge of industrial policy and who was, significantly, a former Guangdong party secretary.

Translation: for the party leadership, Chinese neoliberalism is the way to go; it trumps even the fight against corruption and the effort to relive social inequality. Why? Because the dynamism of the market - tweaked with some reforms - must rule; after all, this is the tool that has allowed China to grow at such speed.

The hidden trillion-yuan drama is that Western neoliberalism is being imposed in China against the will of a lot of people. The proof: if there were Western-style free elections in Chongqing, Bo would win in a landslide.

China has also seen Hong Kong dabbling with exactly those "political reforms", as described by Wen Jiabao: a "controlled", not exactly democratic, election for the ultra-sensitive post of Hong Kong's chief executive.

Under Deng's "one country, two systems", everything political that happens in Hong Kong offers a clue to how China is moving towards a more democratic system.

The voters in Hong Kong were only the 1,200 elite members of the Hong Kong Election Committee, a collection of wealthy tycoons, top civil servants and politicians.

The two top candidates had Beijing's seal of approval. The third, Albert Ho - chairman of the Hong Kong Democratic Party - knew that he was unelectable. At least he could get away with saying: "If I really have to make a choice [between the other two], that's like putting a gun to my head. And I'd say, 'Shoot'."

In the end, these special electors chose Leung Chun-ying, locally known as CY Leung, by 689 votes to Henry Tang's 285 (Ho got only 76).

In Hong Kong, as in China, corruption is still part of the picture. CY Leung is under investigation for a conflict-of-interest case involving a construction project (unsurprisingly in Hong Kong, CY is a property developer).

But unlike in China, demonstrators made a lot of noise outside the Hong Kong Convention Center, demanding direct elections and waving banners that read: "If there's no revolt, there's no change."

One can imagine the discomfort in Beijing. Even though Beijing does not imperially decide who runs Hong Kong, the party rule is that the chosen leader must be "acceptable" to the people of Hong Kong. It would be enlightening to have an in-depth poll examining whether the "people of Hong Kong" believe CY Leung will look out for their interests.

"Stability, as Buddhism tells us, is an illusion. China's leaders are now riders on the storm."

Now imagine the possibility of millions of China's new urban middle class suddenly deciding: "If there's no revolt, there's no change." To prevent this from happening, the Beijing oligarchy could not risk having populist Bo as a model; he was threatening not only stability at the very top, but how this carefully spun stability is perceived by the 1.3 billion Chinese at the bottom.

So cohesion, consensus and stability had to be the unified message, as China's fragilities are increasingly exposed: how to lift tens of millions more Chinese from an agrarian dead end, how to get decent healthcare for these tens of millions, how to fight multiple instances of party corruption.

There's no question that Deng-inspired, modernised China has hurled a massive strategic, ideological and political challenge at a still-dazed and confused West.

China is home to an immensely sophisticated, ancient civilisation. It harbours an ocean of humanity, and it has been modernising for only three decades (which is only a minute by Chinese standards). The Bo episode was just a minor detail. We will only have a clear picture of where China will be in 2020 after next autumn, or by the spring of 2013. But make no mistake: stability, as Buddhism tells us, is an illusion. China's leaders are now riders on the storm.

Pepe Escobar is the roving correspondent for Asia Times. His latest book is named Obama Does Globalistan (Nimble Books, 2009).